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SEC Filings

8-K
ALTRIA GROUP, INC. filed this Form 8-K on 02/01/2018
Entire Document
 

Altria Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
_________________________


Note 17. Additional Information
 
For the Years Ended December 31,
(in millions)
2017

 
2016

 
2015

Research and development expense
$
241

 
$
203

 
$
186

Advertising expense
$
29

 
$
27

 
$
25

Interest and other debt expense, net:
 
 
 
 
 
Interest expense
$
727

 
$
754

 
$
808

Interest income
(31
)
 
(13
)
 
(4
)
   Interest related to NPM Adjustment Items
9

 
6

 
13

 
$
705

 
$
747

 
$
817

Rent expense
$
43

 
$
53

 
$
48

     Minimum rental commitments and sublease income under non-cancelable operating leases in effect at December 31, 2017 were as follows:
(in millions)
Rental Commitments

 
Sublease Income

2018
$
38

 
$
5

2019
33

 
5

2020
28

 
5

2021
26

 
5

2022
23

 
5

Thereafter
44

 
5

 
$
192

 
$
30

The activity in the allowance for discounts and allowance for returned goods for the years ended December 31, 2017, 2016 and 2015 was as follows:
(in millions)
 
2017
 
2016
 
2015
 
 
Discounts

 
Returned Goods

 
Discounts

 
Returned Goods

 
Discounts

 
Returned Goods

Balance at beginning of year
 
$

 
$
49

 
$

 
$
68

 
$

 
$
46

Charged to costs and expenses
 
626

 
130

 
628

 
133

 
618

 
217

Deductions (1)
 
(626
)
 
(139
)
 
(628
)
 
(152
)
 
(618
)
 
(195
)
Balance at end of year
 
$

 
$
40

 
$

 
$
49

 
$

 
$
68

(1) Represents the recording of discounts and returns for which allowances were created.

Note 18. Contingencies
Legal proceedings covering a wide range of matters are pending or threatened in various United States and foreign jurisdictions against Altria Group, Inc. and its subsidiaries, including PM USA and UST and its subsidiaries, as well as their respective indemnitees. Various types of claims may be raised in these proceedings, including product liability, consumer protection, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution and claims of competitors or distributors.
Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases. An unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages claimed in some tobacco-related and other litigation are or can be significant and, in certain cases, have ranged in the billions of dollars. The variability in pleadings in
 
multiple jurisdictions, together with the actual experience of management in litigating claims, demonstrate that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. In certain cases, plaintiffs claim that defendants’ liability is joint and several. In such cases, Altria Group, Inc. or its subsidiaries may face the risk that one or more co-defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated share of a judgment.  As a result, Altria Group, Inc. or its subsidiaries under certain circumstances may have to pay more than their proportionate share of any bonding- or judgment-related amounts. Furthermore, in those cases where plaintiffs are successful, Altria Group, Inc. or its subsidiaries may also be required to pay interest and attorneys’ fees.
Although PM USA has historically been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from seeking to collect judgments while adverse


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